As part of its most recent budget, New York State created an optional employer compensation expense tax. The aim of the new optional tax is to work around the new federal limitations on the deduction for state and local income taxes that were enacted as part of the December 22, 2018 federal tax law. However, its usefulness is very questionable. Under the optional system, an employer can pa...
There is good news regarding business meals expense. On October 3, 2018, the IRS issued Notice 2018-76, which provides interim guidance for business meals expense. The notice separates the cost of meals from the cost of entertainment, and permits 50% of the cost of business meals to continue to be deducted by a trade or business. The new tax law that was effective on January 1, 2018 speci...
As the fourth quarter approaches, it is useful to remind clients about gift tax considerations, as they consider possible gifting plans before the end of the year. First, effective on January 1, 2018, the annual gift tax exclusion has increased to $15,000 per person, per year, up from $14,000 in recent years. Second, the lifetime exclusion for gift (and estate) tax purposes is $11,180,000, ...
As a result of the new tax law that was enacted on December 22, 2017, there are new rules governing when a taxpayer must use the accrual basis of accounting. Effective for tax years beginning after December 31, 2017, taxpayers with gross receipts of $25 million or less are no longer required to use the accrual basis of accounting, even if they have inventories. For this purpose, gross receip...
As discussed in an earlier post, on August 8, 2018, the Treasury Department issued proposed regulations regarding the passthrough deduction under §199A, as added by the new tax law, which was enacted on December 22, 2017. The passthrough deduction is not available for specified service businesses, if a taxpayer who owns such a specified service business has income above an applicable threshol...
On August 8, 2018, the Treasury Department issued proposed regulations regarding the passthrough deduction under §199A, as added by the new tax law, which was enacted on December 22, 2017. For the W-2 limit, the proposed regulations indicate that W-2 wages paid from each activity must be separately compared to the passthrough deduction for that activity. Taxpayers with income below an appli...
The IRS recently issued Notice 2018-61, which discusses deductions for trusts and estates filing Form 1041. In the notice, the IRS indicates that trusts and estates will continue to be able to deduct fees paid in connection with the administration of the trust or estate on Form 1041 for the 2018 tax year and beyond. Therefore, deductions for expenses that were previously not subject to the 2...
Recently, the Treasury Department released a draft of Form 1040 for the 2018 tax year. This is still only a draft, but it has created a stir, since the draft has significantly fewer lines than the current version of Form 1040. In addition, the Treasury Department has discussed eliminating Forms 1040A and 1040EZ and using only the shortened version of Form 1040. In order to shorten Form 10...
The new tax law that was enacted on December 22, 2017 greatly increased the allowable deduction for passenger automobiles that are used for business purposes in 2018 and later years. Practitioners should alert their clients about these greater deductions and use the higher limits for tax projections for the 2018 year. The limit for depreciation for vehicles placed in service in 2018 is $10,0...
In December 2017 and January 2018, in our seminars, we pointed to a proposed change in the CPE requirements for New York CPAs. The New York State Department of Education is currently considering a requirement that New York CPAs obtain two hours of ethics CPE each year, instead of obtaining four hours of ethics CPE at any time during each triennial registration period. However, the proposed r...
